However, it's not necessarily the best strategy for the average startup, which may find itself destroyed as grist for the VC money mill.
Fortunately, there's a place for both "next big thing" companies as well as "next little thing" companies. And there's nothing wrong with doing bread-and-butter business helping entrepreneurs realize their dreams even if it doesn't result in gigadollars and news coverage on CNN.
It also provides some context to the conversation. If only the companies most likely to become giga-corporations ever received investment capital how many opportunities would be passed up? More so, would a world populated mostly by gigacorps be a world you would want to live in?
Clearly, some VCs do like YC. Didn't Sequoia invest a few million dollars in them?
Extreme example: Wealth also prevents quality people from pursuing aggressive startups (yes, there are plenty of exceptions). And it would be incredibly self centered to complain that you can't fund entrepreneurs because they're satisfied with their savings account.
From what I understand, YC encourages its startups to focus on a specific/core problem - which might misunderstood as thinking small. But thats exactly where large opportunities can be found.
Also, obviously big ideas (that all agree will show big growth & big exits) will also be heavily competed by existing established and entrenched players with a lot more resources (not to mention, other startups). If VCs ignore YC (and others like it), they do it at their own disadvantage